20% slump in the land value of residential buildings

Research by Savills, the renowned estate agent, points out a 20% slump in the value of residential building land, in first six months of the current year. The land, being the main assets of the house builders, could further suffer decline of up to 50% in its value as per the findings of the report.

The value of Greenfield sites fell by 22.5% while Brownfield sites registered a drop of 19.8%. The average drop is estimated to be four times the rate of housing prices due to lack of investment. The erosion in the value of development land is causing big concern for the hard hit property sector.

According to Ms Yolande Barnes, Savill’s director of research, falling land values bring down the share prices and badly affects heavily indebted owners who are being pressurised by the banks to repay debts. This compels them to sell development land at a heavy discount.

The fall in value has come at a time when heavily indebted house builders, Taylor Wimpey, Persimmon and Barratt are scheduled to update the market in the coming three weeks. Their share prices have crashed by 85%, in the past 12 months.

Analysts are anticipating that some companies may decide to write down their value of development lands as done by Taylor Wimpey.

Ms Barnes opines that slump in the land value has presented good opportunity for those who have no dearth of money for investment. According to her, this is the right time to make fortunes in the market.

Home Insurance for peace of mind

The unfortunate scenario of your house getting completely damaged in a mishap such as fire can be a shattering experience.  It could also be that your house gets ransacked.  Have you tried thinking about the enormous costs that will be incurred to rebuild your home, or replace your precious possessions.   Even though just a few pounds spent every month should be able to provide home insurance.

It makes sense to insure your valuable possessions. You benefit from the reassurance of financial protection covering you for such an occurrence. The most frequently used forms of home insurance offers financial indemnity for any loss or damage to the property and possessions, arising on account of theft, fire, floods, or any other unforeseen events.

All home insurance policies are quite comprehensive in terms of the protection they offer and the cover they provide for the loss of household items, in addition to fixtures and fittings.  Some of the most common household goods covered under these insurance policies include furniture and furnishings, electrical items, kitchen items, clothing, jewellery, general household items and chattels.  Even in the case of frozen food items, if the freezer items have been lost or damaged owing to power failure or equipment failure, it shall be covered and accounted for.

Investing in the UK property, a good option to multiply return on investment

Wealthy people all over the globe have always loved to make cross border investment in property. Nowadays, people are purchasing offshore real estate property with the sole aim of multiplying returns on their investment. Many people prefer the UK for investment since they get legal cover for protection of property unlike any emerging economy in the world.

Investing in the UK property provides hedge against falling US dollar. Your monthly rental increases in value, even if it remains unchanged, due to fall of US dollar against the British pound. The currency movements make a greater impact on returns on investment.

The UK’s strong culture of renting prevalent in many cities provides more opportunities for multiplying your income than investing in other countries. Many foreign nationals visit the UK for education. This gives you an opportunity to rent your property to overseas students.

There are places like Lake District where foreign tourists visit in large numbers and look for rental accommodation. If you invest in property in such areas, you can safely assume continuous flow of income from your rented property.

Investing in property in the UK and renting it is a good option to multiply return on investment.

Retail Industry heavyweights pushing up for rent reform

Retail industry led by Lord Harris and Sir Philip Green would take up the issue of wide-ranging rent reforms with the landlords in the month of September. The retailers are facing big financial constraints owing to the consumer downturn, and in order to mange cash flows want landlords to adopt monthly payment practice of property costs instead of existing quarterly advance payment.

All the retailers are demanding lowering of service charges and review of lease structure. The property sector is worried over the ongoing agitation and apprehends that acceptance of retailers’ demand would provoke other tenants to demand similar concessions.

Carpetright chairman Lord Harris, Arcadia owner Philip Green and a few retailers would hold talks with some of the landlords during the next four weeks. According to Lord Harris, the talks would also cover issues like service charges and introduction of 10-year lease on the European pattern.

The demand for offering monthly rents as the standard best practice is also voiced by the stronger store chains. Stephen Robertson, director-general British Retail Consortium, in his letter to the British Property Federation has urged adoption of monthly payment and reiterated BRC’s support to the proposed negotiations.

British Property Federation (BPF) members are ready to consider monthly payment in the new lease negotiations. Liz Peace, the BPF chief executive, insists that landlords would like to help tenants that are genuinely in trouble.

Morgan Sindall, the UK construction group, registers impressive profit

The UK construction group, Morgan Sindall has surprised the construction industry by presenting an upbeat scenario of its high performance in the remaining period of 2008. The group announced increase of 13 per cent in pre-tax profits to £28.6m during first-half of the current financial year. The shares had lost almost half the value this year.

Though the company had warned that its venturing in to private sector housebuilding would create adverse impact on its performance in 2009, it maintained that it would deliver good results for the rest of 2008. The analysts, however, estimate that Morgan Sindall’s profits would go down by 10 per cent to £61m.

The Morgan Sindall group’s other activities include affordable housing, office refurbishment, infrastructure services such as railway works and urban regeneration services. As per the company data, Morgan Sindall’s revenues from construction unit increased by 100 per cent compared with the same period last year. The group’s revenues jumped to £1.24bn from £836m in the first half of 2007. It raised the interim dividend by 20 per cent to 12p, while the basic earnings per share were up 22 per cent to 50.1p.

Analysts concur with Morgan Sindall’s expectations of good performance, but apprehend that slump in the building sector could affect performance of its other divisions.

Liberty International loses £458m in property values

The property company, Liberty international, which is also the owner of London’s Covent Garden, suffered huge loss of £458m in first six months of the current year. The weakening retail sector has impacted real estate downturn. Liberty International is the UK’s biggest shopping centre landlord. More than 13% of its net value per share has been wiped off.

Liberty suffered 7.4% fall in its property valuation amounting to £639m off its £8bn portfolio. The company registered £458m pre-tax loss as against £552m profit a year ago. According to the company information, its rental income fell by 0.7% and like-for-like basis income dropped by 2.6%, since the company was forced to pay bad debts of tenants in administration.

Chief executive David Fischel is predicting low consumer spending, but is confident of outperforming market average. Meanwhile, new schemes including Westgate development in Oxford have been put on hold. The rate of progress at St. David has also become a cause of worry since only 32% is let by income, while the centre is scheduled to open just after 12 months.

Free legal advice to those facing eviction

The Legal Service Commission would announce launch of emergency legal schemes to provide free legal advice to those facing eviction. Charities have called repossession figures as “shocking” and urged extending more help to the home owners.

Sale-and-rent-back schemes are so far not governed by any regulations. This led to exploitation of desperate consumers who struggle to avoid repossession.

The National Landlords Association (NLA) chairman, David Salisbury, has urged that consumers facing threat of imminent repossession due financial difficulties must be given legal protection against rouge landlords. Landlords violating the code could be asked to pay compensation and would be expelled form the NLA.
In such uncertain times, if you own property and make up your mind to let it, you must do some homework before taking the first step. In order to reap the benefits of investment, you must do some data collection in the area surrounding your property.

The data regarding prevailing rental prices, quality of your property in comparison with others and the demand and supply position of rental properties in that area, would be very useful in deciding a realistic rent for your property.

Laxey and Livingstone brothers sign truce

Laxey Partners and Livingstone brothers decided to end their bitter battle and called off extraordinary general meeting. Laxey, with stake of 11.1 per cent in NR Nordic & Russia Properties, worth £225m, had convened extraordinary general meeting for public discussion on company’s performance and providing an opportunity to its share holders for voting on the company’s business direction. It was seeking Ian Livinstone’s removal from the board and appointment of Robert Ware the head of NR Nordic & Russia Properties’ Terra Catalyst Fund.

The two sides recently reached an agreement put forth by Laxey. According to the proposal, announced by NR Nordic & Russia, Robert Ware and Colin Kingsnorth, the chief executive officer of Laxey would join its board and the present member Kari Osterlund would retire at his own request. It was agreed to provide an option to shareholders to take back their capital and the board would not seek new acquisitions without shareholders’ approval.

The ex-Northern European Properties, now renamed as NR Nordic & Russia, was listed as a vehicle in June 2007, for investment in Nordic and Baltic property. Its manger was a subsidiary of London & Regional NR Nordic & Russia’s portfolio of £618m comprises Swedish office and industrial assets in Vasteras, a Swedish town.

Homework that you must do before letting your property

Property letting can be an assured source of income for the landlords. The first part of the homework would be to decide the rental price at which you would like to let the property to any prospective tenant. This decision would determine the success or failure of your investment in rental property.

There are many other important decisions that a landlord has to take in the beginning and during the course of property letting, but fixing of rental price is the first and most important one of all the decisions. If you quote substantially high rental price to the prospective tenant, very few will turn up for negotiating a deal thereby prolonging your waiting period and delaying the flow of income.

If you decide to quote rental prices too low, hoping that you will seal the deal quickly, you may falter. Low rental price would defeat your purpose of property investment due to poor cash flow. The relevant data could easily be gathered online since many UK property websites provide useful information about ‘to let properties’. Get acquainted with websites, complete your homework, and take next important step of identifying a good prospective tenant.

Hammerson’s like-for-like rental income grows up by 4.4%

Despite of consumer downturn and economic slump, Hammerson could manage an increase of 5.4% in its like-for-like rental income in the City of London. It was expecting significant increase in its income on account of completion of large number of developments, but the rapid increase in incentives to office and retail tenants affected its income. As per company’s interim results, its retail schemes in Bristol and Leicester were 87% let but rent free periods had moved out to 24 months from 12 during the current year.

Its 125 Old Broad Street City office scheme was 35% let but rent free periods had increased to 30 months on lease of 15 years. Tenant quality on retail side was better than Liberty International, which had 3% rent roll in administration compared to Hammerson’s 0.3%.

But good rental performance failed to reflect in Hammerson’s portfolio, which declined to £7.1bn form £7.3bn at the end of December, amounting to a fall of 10% in the net asset value. Hammerson registered worst performance in its retail warehousing sector. The fall in value was 13%, around 3.7% below the Investment Property Databank average.

Chairman John Nelson, while explaining reasons for the below-par performance, noted that conditions in international debt markets led to slump in the real estate values and it was unclear when the situation would improve. But he expressed confidence in experience of management and Hammerson’s business strengths in exploiting difficult market conditions to its advantage.